Oil rises after larger-than-expected US inventory drop

Stalemate in talks for US stimulus package may weigh on crude prices

LONDON:

Oil prices rose on Wednesday after an industry report showed US crude inventories last week fell more than analysts had expected, bolstering hopes that fuel demand in the world’s biggest economy can weather the coronavirus pandemic.

Brent crude was up $0.68, or 1.5%, at $45.18 a barrel by 1350 GMT, after falling around 1% on Tuesday.

West Texas Intermediate CLc1 oil was up $0.74, or 1.8%, at $42.35 a barrel, having dropped 0.8% in the previous session.

The American Petroleum Institute said on Tuesday that crude stocks fell by four million barrels last week versus analysts’ expectations in a Reuters’ poll for a draw of 2.9 million barrels.

It also showed falls in gasoline and distillate stocks. Official government data is due later on Wednesday.

The “fall in US API crude inventories..., the third sizeable weekly fall in a row, has supported prices,” said Jeffrey Halley, senior market analyst at Oanda.

A downward revision to a key US oil production forecast for this year also lent support to prices.

The US Energy Information Administration now expects US crude production to fall by 990,000 barrels per day (bpd) this year to 11.26 million bpd, steeper than the 600,000 bpd decline it forecast last month.

World oil demand will fall by 9.06 million bpd this year, the Organisation of the Petroleum Exporting Countries (OPEC) said in a monthly report on Wednesday, more than the 8.95 million bpd decline expected a month ago.

Still, growing uncertainty over a stalemate in Washington in talks for a stimulus package to support recovery from the deepest impact of the pandemic may weigh on prices.

In India, refined fuel consumption fell to 15.68 million tonnes in July, down 11.7% year-on-year and 3.5% below June’s levels, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas showed.